08TBILISI867, SCENESETTER FOR CODEL WEXLER VISIT MAY 28-30, 2008

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UNCLAS TBILISI 000867
SENSITIVE
SIPDIS
H FOR CODEL WEXLER
STATE FOR EUR/CARC
E.O. 12958: N/A
TAGS: PRELPGOVECONPHUMOVIPGG
SUBJECT: SCENESETTER FOR CODEL WEXLER VISIT MAY 28-30, 2008
May 21 Parliamentary Election Initial Analysis
---------------------------------------------
¶1. (SBU) Your visit to Tbilisi comes just on the heels of the May 21
Parliamentary elections, with Saakashvili's United National Movement
easily obtaining a strong majority in the new Parliament. These
elections are the culmination of domestic tensions which peaked last
fall between the dominant ruling United National Movement party and
the diverse opposition parties. President Saakashvili made a speech
broadcast publicly early on May 22 where he pledged to work with
every opposition member and faction in the new Parliament. Local
NGO "New Generation, New Initiative" gave us privately their
Parallel Vote Tabulation results which gave ruling United National
Movement 58.53% of the Party List vote. The United Opposition,
Christian Democrats, and Labor party also gained seats in
Parliament.
¶2. (SBU) Our initial analysis of election day is that the election
administration was an improvement over the January 5, 2008,
Presidential election. Local Precinct Election Commission (PEC)
members were better trained and on the whole, knew and carried out
their responsibilities effectively. PEC members either
self-corrected irregularities as they came up or corrected them when
pointed out by one of the 38 joint U.S./UK observation teams. This
analysis does not review the entire counting process or turn-out
rates which will be important for any final review of the election.
OSCE's Office of Democratic Institutions and Human Rights (ODIHR)
monitored the elections and ODIHR, together with the Parliamentary
Assembly of the Council of Europe, and the OSCE Parliamentary
Assembly noted in a statement that "political stakeholders in
Georgia made efforts to conduct parliamentary elections in line
with international standards, but a number of problems were
identified which made their implementation uneven and incomplete."
Embassy will provide updated election reporting information via
e-mail.
Context of Georgia's Strategic Importance
-----------------------------------------
¶3. (SBU) Georgia is a strategically significant country to the
United States because of its government's commitment to democracy,
independence from Russia, free market economic reform, control of
corruption, NATO and EU membership aspirations, and support for the
Global War on Terrorism. Notably, Georgia has the third largest
contingent of troops (2,000) serving in Iraq with coalition forces.
The Government recently agreed to extend its commitment in Iraq and
will deploy a follow-on brigade in December. Georgian peacekeepers
participate in UNMIK in Kosovo and are in discussions with NATO
about troop contributions to the Afghanistan mission.
¶4. (SBU) Georgia's success or failure sends a distinct message to
other countries of the former Soviet Union, and in the Middle East
as well, about the wisdom of a Western-oriented, democratic, free
market orientation.
Additionally, Georgia sits astride the main alternative
corridor for trade in oil, gas, and other goods to Europe
from Central Asia and farther East. Without Georgia's
cooperation, no strategy for bringing additional Azeri,
Kazakh or Turkmen oil and gas to the world market without
passing through Russia can succeed. These facts begin to
explain as well why Russia is openly hostile to Saakashvili's vision
of an independent Georgia.
¶5. (SBU) Since Saakashvili took office, Georgia has
substantially reduced the corruption that was bleeding its
treasury dry under his predecessor. Saakashvili famously
fired the entire Georgian traffic police force in 2004, and
retrained and rehired a much smaller staff which enjoys over 70
percent confidence of the public - an unheard of statistic for
patrol police in the former Soviet Union. Saakashvili's Government
has also made arrests for corruption among all levels of government
common news as well. As a result, government revenues are up,
electricity flows 24 hours per day, and government investment in
repairing and replacing infrastructure that had badly deteriorated
since the fall of the Soviet Union has increased. Even with these
improvements however, public perceptions among the urban population
endures that Saakashvili has spent public revenue on large-scale
development projects while much of the population struggles with
unemployment, underemployment and rising prices as a consequence of
economic growth.
¶6. (SBU) Following the sting of losing the Tbilisi vote in his
election victory in January, Saakashivili reallocated funds from the
military and law enforcement budgets to support large increases in
social spending. Saakashvili and his economic team remain committed
to a macro-economic approach that seeks to attract investment by
cutting taxes, eliminating tariffs and reducing red tape and
corruption. Their express models are Singapore and Hong Kong.
Saakashvili intends to continue reforms in his second term, and
work is especially needed to c
reate a truly independent judiciary.
We would encourage you to commend his reform and encourage
Saakashvili's and the ruling party's intention to introduce new
reforms that would strengthen the Parliament and improve the
independence of the judiciary.
NATO - Bucharest Aftermath:
---------------------------
¶7. (SBU) Although Georgia did not receive a Membership Action (MAP)
at the NATO summit in Bucharest, top Georgian officials lauded the
results as a major success, pointing to language in the April 3
summit communique that Georgia and Ukraine "will become members of
NATO." In a broadcast from Bucharest, a visibly pleased President
Saakashvili termed the document a "crossing of the Rubicon by
Georgia," in which NATO members in support of Georgia had prevailed
in a "life and death struggle" against the skeptics. Saakashvili
said that while MAP is "a pledge that if you pass through the action
plan well, you may become a member of NATO," the communique is a
"direct commitment by NATO that Georgia and Ukraine will become
members of the alliance." Saakashvili hopes that Georgia would be a
member of NATO well before the end of his presidential term in five
years. The next step is a review of Georgia at the NATO Ministerial
in December, and one area highlighted by the Bucharest Summit is the
importance of the Parliamentary elections to Georgia's bid.
¶8. (SBU) Georgian popular support for moving toward NATO is some 78
percent, and initial reaction from the Opposition and the Georgian
media focused on the decision not to give Georgia MAP, which was
reported earlier than the release of the communique. Several
opposition party leaders blamed the Georgian government for losing
MAP due to a failure to fulfill commitments to democracy.
Economy and Public Discontent Both Grow
---------------------------------------
¶9. (SBU) Recent political problems have some economic roots.
Inflation has made many staple food and consumer items more
expensive for all Georgians. Only a wealthy few are able to take
advantage of the new, glittery housing developments across Tbilisi,
despite the fact the economy grew 9.4 percent in 2006 and 12.4
percent in 2007. Growth will likely slow somewhat in 2008 as
political turmoil has caused investors to hesitate. The emphasis in
government spending has already begun to shift from infrastructure
and defense to education and public health, as Saakashvili moves to
enact his campaign slogan of "Georgia without Poverty."
10.(SBU) In contrast, the opposition primarily blames current
discontent with Saakashvili and his ruling party on
injustice, rather than economic reasons. Property owners
were disturbed in 2007 by the government's willingness to
evict long-term tenants from state-owned buildings, challenge
corruptly procured ownership rights in privatized property, and even
to destroy some buildings in Tbilisi that were allegedly built
illegally. Saakashvili's own unshakable belief in the rightness of
his cause contributed to a widespread perception of aloofness and
unwillingness to listen to outside voices, which hurt him in the
polls. Since the election Saakashvili has made extra effort to
reach out to various alienated sectors of society. For example,
Saakashvili went to the Ombudsman's office to meet him and publicly
announced a renewed effort to protect Georgians' human and civil
rights.
¶11. (SBU) We estimate U.S. investment in Georgia at about USD 770
million since 2000. The United States and Georgia signed a Trade
and Investment Framework Agreement in June 2007. U.S. assistance to
Georgia in 2008 will be more than 150 million dollars, directed to
strengthening democracy, rule of law, free markets, and energy
security, among other
objectives. Georgia is 2 years into a 5 year Millennium Challenge
Corporation compact. Georgian officials would welcome a free trade
agreement with the United States, which would attract investment and
support jobs, stability, and growth in this friendly and strategic
country.
Energy
------
¶12. (U) Georgia produces very little oil and gas on its territory,
and must import most of its 1.7 billion cubic meters per year needs
for national gas. The country has enormous potential for
hydroelectric power generation, however. Major existing hydropower
sources such as the Enguri dam and 1150 megawatt power station fell
into disrepair after the fall of the Soviet Union and have only
recently been rehabilitated. New sources of hydropower are being
developed. Before 2004 electricity blackouts were common throughout
the country, but now the system approaches consistent 24-hour a day
service. In fact, Georgia now exports electricity to Turkey, Russia
and Azerbaijan.
¶13. (U) Until 2006, Georgia was entirely dependent on Russia for
supply of natural gas. Since Georgia began taking political stands
Russia dislikes, the price of gas has increased more than fourfold
to about $270 and serious doubts have arisen about the reliability
of Russia as a supplier. Because of conservation, new
hydroelectricity sources and the availability of natural gas from
Azerbaijan, Georgia's dependence on Russia for supplies of natural
gas is decreasing, although it still must import the bulk of its
needs.
¶14. (U) Gas from Azerbaijan is imported to Georgia via the
Baku-Tbilisi-Ezerum pipeline, which parallels the
Baku-Tbilisi-Ceyhan (BTC) oil pipeline. Azeri gas is also imported
from other sources in Azerbaijan pursuant to contracts. In 2008,
Azerbaijan and Georgia had difficulty reaching agreement on the
price and amount of the latter supplies, but a temporary arrangement
is in place until later this year. Negotiations for a longer term
arrangement are underway.
¶15. (U) Georgia has three oil terminals on the Black Sea, to which
oil is shipped by rail and pipeline from Azerbaijan. The BTC
pipeline provides an outlet for an additional million barrels of oil
a day. When all oil transport systems are fully operational, about
2 percent of the world's current daily consumption of oil will
transit Georgia. Georgia naturally supports efforts to increase the
flow of oil and gas across the Caspian. It can be a good ally in
convincing the Turkmenistan and Kazakhstan governments to cooperate
with Western companies to increase volumes transported via the
Caspian to regional and global markets.
Conflict Regions: Abkhazia and South Ossetia
--------------------------------------------
¶16. (SBU) Georgia's long-simmering problems with its
separatist regions of South Ossetia and Abkhazia persist from the
early 1990s. Tensions with Russia have increased in the aftermath
of Kosovo's independence, and as Georgia has moved toward NATO.
Russia has recently taken a number of steps to strengthen its ties
with the breakaway republics. Georgian authorities have strongly
protested these a
ctions which include a unilateral lifting of CIS
economic and military sanctions on Abkhazia and South Ossetia and
authorizing official government contacts with the de-facto
authorities. Russia has also increased tension in the region by
using its fighter jets to shoot down Georgian Unmanned Aerial
Vehicles (UAV) and increasing the number of its peacekeepers
stationed in Abkhazia without consulting the Georgian Government.
We believe the Georgian government is sufficiently committed to its
NATO membership drive that it would not jeopardize that goal by
taking military action. It will, however, have to resist internal
pressure to do so.
¶17. (SBU) Regaining the separatist regions lost in the early 1990's
during intense internal conflicts is considered a national priority
by a great majority of Georgians. Regular reliable polling
continues to bear this out. The political leadership's focus on
this goal reflects that fact. Moreover, official U.S. policy
supports Georgia's sovereignty and independence within its
internationally recognized borders, which includes Abkhazia and
South Ossetia. We reject any parallels with Kosovo, as well.
Jewish Community in Georgia
---------------------------
¶18. (SBU) There are an estimated 10,000 Jews in Georgia. The cities
of Tbilisi, Kutaisi, and Batumi have the largest Jewish populations,
but emigration to Israel since the collapse of the Soviet Union has
greatly reduced the population. Georgia is known for its tolerance
of minority religions, and the Jewish community has good relations
with the other major religious groups in Georgia, which has a
history of tolerance for minority religions (the overwhelming
majority of the population is at least nominally affiliated with the
Georgian Orthodox Church.) The leader of the main Synagogue in
Tbilisi is Rabbi Avilenekh Rozenblad. In a May 2008 discussion with
embassy officers, Rozenblad said the community does not face
problems with discrimination. Anti-semitism is rare in Georgia. In
April 2008, three Jewish graves near Batumi were vandalized, but
Rabbi Rozenblad described this incident as highly unusual, saying it
had been over a decade since there had been any similar incidents in
Georgia.
TEFFT

The information recorded on this site has been extracted from http://Wikileaks.org (Georgia) database..

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